Unit linked policies to get interest in case of discontinued policies

Unit-linked policies (ULIP) holders will get interest on their policies even if they discontinue their policies. Insurance regulator IRDA came out with a notification stating ULIP holders who discontinues their policy in mid-way would get a minimum interest rate as applicable with Stake bank of India savings account rate.

ULIP

Insurance Regulatory and Development Authority has changed its rule for policy holders of Ulips. The policy holder of ULIP’s (unit linked insurance products) will have the right to revive the unpaid premium policies within 2 yrs from the date of discontinuance of the policy. It should not be later than the expiry date of its lock in period. It has also said that the insurance companies will have to pay a minimum guarantee of interest at par with Savings account of government owned SBI. The policyholders will be duly charged for discontinuation of their policy as discontinuation charges as it will get revived. The compensation will be on the Net Asset Value (NAV) basis of the units.

The regulator has asked all the insurance companies to segregrate the fund that are related to the discontinued policies and that shouldbe invested in a proportionate way approved by IRDA. A policy which is stopped in middle in those cases the insurers can only levy the fund management fee and discontinuance charges. Apart from these fees no other charges should be levied.

“Bell the bull says: For more info on IRDA guidelines on discontinued insurance policy stay tuned to the website.”